DOD: Afghan gas station now estimated to cost less than $10 million
January 20, 2016
WASHINGTON — The Pentagon said Wednesday that it spent less than $10 million — far less than previously reported — on a controversial natural gas filling station in Afghanistan.
The station was the focus of an inspector general investigation into wasteful spending but a consultant that put forth the original $43-million estimate has now dramatically revised that figure, said Brian McKeon, principal deputy under secretary of defense for policy.
John Sopko, the special inspector general for Afghan reconstruction, accepted the new estimate but said even $10 million was unjustified for the project.
Both men were called to testify before the Senate Armed Services Committee on Wednesday after SIGAR published reports in recent months finding a $800-million Defense Department task force charged with rebuilding the Afghan economy had wasted money on an ill-conceived natural gas facility in the northern town of Sheberghan and also spent $150 million on lavish accommodations such as flat-screen TVs and personal refrigerators.
“We believe the methodology used by [the consultant] is flawed and that the station costs are far lower,” McKeon testified.
After a review, the firm told the DOD that the total costs are likely “well under $10 million.” The cost estimates changed because SIGAR calculated $30 million in overhead costs that actually were tied to a variety of other energy extraction projects in Afghanistan, he told lawmakers.
Sopko, who has rooted out numerous examples of potentially embarrassing waste, defended his release of the much higher estimate in a report published in October.
“It was the best evidence that we had at the time … it would have been irresponsible for SIGAR not to report it,” Sopko said.
The Defense Department had been asked to respond to the costs since May but did not provide the information, he said.
“Last night, DOD discovered that the number was an error … I have to say senators, I wish they had done so earlier but I guess it is better late than never,” Sopko said.
He said there is still no good explanation for the expenditure, which was made without a cost-benefit analysis to determine whether it would be a worthwhile project for the DOD’s Task Force for Business and Stability Operations, which was disbanded last year.
The station is being used now by 160 cars each day. Sopko found in October that Afghanistan does not have the infrastructure to support a natural gas market and that converting vehicles to run on natural gas costs $700 per car, while the average Afghan annual income is $690.
The testimony from McKeon and Sopko was the latest clash in what has become a tense relationship between SIGAR and the Pentagon.
Another SIGAR report has found the DOD economic development task force spent $150 million on specially furnished villas, contractors to provide 24-hour building security, three-star food services and bodyguards.
Sen. Kelly Ayotte, R-N.H., asked McKeon why the task force staff could not stay on a military base to save money.
“That’s 20 percent roughly of the money allocated by Congress” for Afghan economic development, she said.
The Pentagon is still looking into those SIGAR findings, according to McKeon.